Fisker, headquartered in Manhattan Beach, California, was once the darling of the electric vehicle startup industry. However, recent signs indicate that if Fisker cannot shake off the shackles of its debt holders, it is highly likely to file for bankruptcy in mid-June.
According to Fisker’s annual report submitted to the U.S. Securities and Exchange Commission (SEC) on April 23, the company failed to pay $8.4 million in interest last month, resulting in a loan default.
The company stated in the report, “It is necessary for us to obtain a significant amount of additional funds in the short term to execute our business plan and continue our operations. If we are unable to obtain the required amount of funding in the needed time, we may need to further reduce our operations.”
“We have concluded that there is substantial doubt about our ability to continue as a going concern,” the report clearly stated. “Additionally, if we cannot raise funds in the short term or obtain forbearance agreements and/or waivers from our debt holders to relieve current default responsibilities, we will be unable to fulfill our debt obligations and may seek protection under applicable bankruptcy laws.”
In May 2021, the leading global electronics manufacturing giant Foxconn Group (known as Hon Hai in China) announced an official framework agreement with Fisker to collaborate on the project “PEAR” (Personal Electric Automotive Revolution), aiming to jointly develop groundbreaking electric vehicle products expected to start production in the fourth quarter of 2023 in the United States.
The preliminary plan between the two parties outlined the pricing of the first jointly developed electric vehicle to be under $30,000, with an expected annual production volume exceeding 250,000 vehicles. The target markets include North America, Europe, mainland China, and India.
However, with news circulating about Fisker’s potential bankruptcy filing, uncertainties loom over the collaboration between the two companies. In its latest report, Fisker stated, “We have decided to seek partnerships with existing manufacturers rather than build new production capacity.”
In March, Fisker suspended production for six weeks and raised $150 million to sustain its operations.
Subsequently, the company initiated a major price reduction campaign to clear inventory and raise funds: the 2023 Ocean Extreme model electric car was reduced by $30,000, priced at $37,499; the Ultra model received a $18,000 price cut, selling for $34,999; and the Sports model was priced at $24,999, cheaper by $14,000.
The Ocean electric vehicle is Fisker’s first all-electric vehicle delivery, aiming to enter the vast and rapidly expanding high-end luxury SUV electric vehicle market. Oceans, with its design, has won multiple awards and has made several appearances at the Los Angeles International Auto Show.
Fisker was co-founded by Danish automotive designer Henrik Fisker and his wife, with a valuation that once soared to $2.9 billion. Fisker has been involved in the design of many high-end cars, such as the Aston Martin DB9 and the BMW Z8.
In 2007, Fisker and partners co-founded Fisker Automotive, receiving significant private and public investments, including a $529 million loan provided by the federal government. The company then launched the Fisker Karma model, one of the world’s first luxury plug-in hybrid electric vehicles.
Due to repeated production delays, the production of the Fisker Karma was forced to stop in November 2012; the development of new models was also halted.
After the failure of the electric vehicle business for the first time, Fisker founded the new Fisker company in 2016, but now, it is once again facing operational and financial difficulties, with its bank account balance in critical condition.
Fisker’s annual report submitted to the SEC shows that the company spent approximately $900 million in cash on operations and investments last year, reducing its cash balance to about $326 million. As of April 16, the company’s cash balance further decreased to about $54 million.
Fisker expressed hope to raise more debt or equity financing through partnerships with other manufacturers or selling cars.